Getting Started
Running a month-to-month budget is something most of us do. We like to know we’re living within our means and able to pay not just the bills but also the cost of our lifestyle. That’s REALLY important.
If you’re not doing this, I’d suggest you start. Personally, I’ve found getting ‘intimate’ with my outgoings has been very revealing. There are loads of ‘sneaky’ expenses that we don’t notice until we study them a bit.
If you’re not doing so already, get to know your spending. Let it become your friend. I promise it will give you a real sense of confidence and control. That’s a good place to be.
Money Outside Your Current Account
Of course, any money you might have in personal pensions, SIPPs, ISAs, investment bonds, General Investment Accounts, stocks & shares, etc. (the list goes on!) is YOUR money.
It’s REAL money but it feels different to the money you have in the current account you use for your day-to-day expenses. There’s more of a disconnect. You know it’s there but it sort of sits in the background.
You probably have some idea of what’s happening with it but a lot of us don’t keep a close eye on it until the company it’s with writes to us about something or send us a valuation.
Thankfully, this is changing with more and more people going online to check their values and to see what’s going on but that’s far from all of us.
What makes things worse is if you have loads of little pots of money, dotted all over the place with several different companies. That can make staying on top of things a bit of a nightmare.
What’s Happening with It Then?
Almost always, this money will be invested in funds. Funds are BIG pots of money that invest groups of investors’ money into specific areas (depending on what the aim of the particular fund is).
For example, you might have one fund that focuses on stocks & shares across the globe, another that invests in government bonds and, maybe, one targeted towards on ethical companies. The list is pretty long!
It might be useful to you to check out an article I wrote recently about investing for beginners. I’m not trying to teach you to suck eggs but this stuff can be overwhelming!
You might have chosen the funds yourself, they may have been recommended to you by a financial adviser or you might have ticked a ‘default invest’ button when you set things up.
Is it Doing What You Need it to?
Are the funds ‘good’, ‘bad’ or ‘ugly’? Well, things to consider are how risky they are, how much you’re paying for them and what previous performance has been like. This is stuff that’s pretty easy to find out.
It will give you clues as to whether you’re in the ‘right’ finds. This can get slightly tricky but, with a bit of help, I promise it’s not that complicated to understand.
The actual company you hold your investments or pensions with isn’t the key issue when it comes to your money growing. That’s down to the funds your invested in WITHIN the product if that makes sense?
Have a Plan
Without a longer-term plan, how do you know your invested money is on track? On track for what? Sure, seeing your money go up over time is great but surely there needs to be a point to it. An end game in mind.
This is where you need to think about your future. It doesn’t matter what age you are. Think about the life you want to be having (which could be the same as your current life) and what that’s going to cost.
Again, with a bit of help and a decent plan, you can easily work out some important things:
Is your invested money (pensions, investments, etc.) on track to deliver what you need from them, when you need it?
Are the funds you’re in the most suitable for you based on their cost, their performance and how you feel about investment risk?
Taking this into account, what changes (if any) might be sensible? Are there things you could / should be doing to improve on things?
It’s Logical Captain
So much about managing your money is down to following a logical process. A process that works for you and delivers the right results.
Yes, there’s a bit of complication but not so much that it’s not beyond any of us. It’s certainly worth putting a bit of work in to stay on top of this. it could pay you dividends in the future in more ways that one!
Thanks for reading this and, if you feel inclined, check out the website for more wonderful articles!
Best wishes for now…